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  • FIRST POST
    • Former MSE Sam M
    • By Former MSE Sam M 1st Dec 15, 3:23 PM
    • 238Posts
    • 159Thanks
    Former MSE Sam M
    Help to Buy ISA guide
    • #1
    • 1st Dec 15, 3:23 PM
    Help to Buy ISA guide 1st Dec 15 at 3:23 PM

    Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.
Page 103
    • eskbanker
    • By eskbanker 4th Dec 19, 2:55 PM
    • 12,106 Posts
    • 15,007 Thanks
    eskbanker
    I have both my ISAS with Nationwide and so I believe it to be a split Isa. So long as I don't succeed the 20,000 a year limit for both Isa put together and go over the 200 a month for the help to buy Isa it does not matter how much I put into my Isas. Is that right?? Also, what does it mean by a Split Isa??
    Originally posted by Grace Lucy
    Split ISA is effectively the (unofficial) term for exactly what you're doing, i.e. operating two cash ISAs with a provider who treats them as if they're a single ISA and therefore you are able to pay into both, subject to the overall £20K annual ISA allowance and also the product-specific HTB limit of £200/month.

    when it states that the first calendar month you can put up to 1200 in a help to buy Isa does it mean that month you open it or a month on from the date you opened it, as I opened my account on the 30th November can I still put up to 1200 in or has it gone to only 200 a month??
    Originally posted by Grace Lucy
    In this scenario, calendar month signifies that if you paid anything (even £1) into your new HTB ISA on 30 November then you only had until the end of that day to complete the £1,200 initial monthly funding. On the other hand, if the first payment into the account was in December then you have until the 31st of this month to pay in the £1,200.
    • BeanoSnitch
    • By BeanoSnitch 6th Dec 19, 8:15 AM
    • 5 Posts
    • 2 Thanks
    BeanoSnitch
    I want to clear something up. I see all the text stating the bonus can be used for deposit at completion. And it canít be used for solicitor fees, surveys, stamp duty etc. What I want to know is can you keep your bonus if you already have funds for deposit and just use it for post purchase costs I.e pay for removal costs, redecorating or to buy appliances to put in new property? This part I never see explained.
    • eskbanker
    • By eskbanker 6th Dec 19, 10:45 AM
    • 12,106 Posts
    • 15,007 Thanks
    eskbanker
    I want to clear something up. I see all the text stating the bonus can be used for deposit at completion. And it canít be used for solicitor fees, surveys, stamp duty etc. What I want to know is can you keep your bonus if you already have funds for deposit and just use it for post purchase costs I.e pay for removal costs, redecorating or to buy appliances to put in new property? This part I never see explained.
    Originally posted by BeanoSnitch
    It's not so much that the bonus can be used for deposit at completion but that it must be used for deposit at completion.

    When applying for the bonus, your conveyancer must formally declare to the scheme administrator that "the entire amount of the Bonus along with any accrued interest will be applied towards the acquisition of the property" (see subclause 7.6.A.v.a of the scheme rules), so it can't be used for anything else.

    However, if you already have enough funds to buy the property, then you can use the bonus in the way it's intended and keep back the equivalent-sized chunk of your own savings for the other items....
    • BeanoSnitch
    • By BeanoSnitch 6th Dec 19, 1:07 PM
    • 5 Posts
    • 2 Thanks
    BeanoSnitch
    Thanks, I wasn't 100% sure. I saw some horror stories of people relying on the bonus but it was dependant on whether seller would agree to wait extra day or 2 for bonus to be released at completion. Because of this I wanted to ensure I had enough money to cover just in case. unfortunately this also meant my deposit could have been more...
    • abdul56
    • By abdul56 6th Dec 19, 8:53 PM
    • 46 Posts
    • 6 Thanks
    abdul56
    Hello,

    I have a Help to Buy (H2B ISA) ISA, it will reach £12,000 in the next 5 months. I Understand that I cannot pay any more into it, above the £12000 limit. However what happens to the interest on the account, as it will go over the £12000, limit.

    Thanks
    • BeanoSnitch
    • By BeanoSnitch 6th Dec 19, 9:16 PM
    • 5 Posts
    • 2 Thanks
    BeanoSnitch
    You can continue to keep paying into your help to buy isa past the £12000. You will still accrue the interest. The only thing that stops is the total bonus you can claim. You will receive £3000 whether you have £12000 or £25000. It caps at £3000
    Cogito ergo sum
    • RobertKr
    • By RobertKr 16th Dec 19, 3:08 PM
    • 3 Posts
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    RobertKr
    I wonder if anyone used (or tried to use) HTB ISA to buy a property with price over 250k threshold (272k to be precise) but the property is new build, shared ownership. I want to buy 60% share (worth about 163k mortgage) and on the remaining 108k pay 250£ rent monthly, with 125 years lease. According to offical HTB ISA website faq
    I quote
    "What is the property price cap for shared ownership schemes?
    In the context of shared ownership properties the price cap applies to the full sale price of the property rather than just the share you initially buy. For shared ownership properties the full sale price is a multiple of the equity share you are buying. In practice this means that if you are purchasing a 25% equity share of a property for £50,000, the full sale value is £200,000. Alternatively, your conveyancer can calculate the sale price based on the price paid for the equity share you are buying plus the net present value of rental payments due over the term of the lease.

    You should speak to your solicitor or conveyancer and they will be able to advise you on whether the property you are purchasing is within the price limit and is eligible for a government bonus.
    " end of quote
    hence I should be able to calculate NPV value of 108k, I think its roughly (3% discount, 3k rent yearly, 125 years lease) 85k and together with 163k price of my share it total to 248k, right below limit. I struggled to find any concrete information, old guideline mention the method
    but in the more recent one the section VII has been changed. I've tried to ask developer about it but no-one seems to know, they send me to coveyancer but i don'w want to start process if I cant use HTB ISA (in total in 2 about 20k saved hence potential loss of 5k bonus)
    • BeanoSnitch
    • By BeanoSnitch 16th Dec 19, 3:15 PM
    • 5 Posts
    • 2 Thanks
    BeanoSnitch
    The most you can claim is £3k made from £12k savings. In addition to this you can’t put more than £1600 into a HTB isa to start and can only add a maximum of £200 per month. Even if you have £20k saved it can’t go straight into the isa. You would have to slowly build it up which takes time
    Cogito ergo sum
    • masonic
    • By masonic 16th Dec 19, 6:35 PM
    • 12,724 Posts
    • 10,228 Thanks
    masonic
    I wonder if anyone used (or tried to use) HTB ISA to buy a property with price over 250k threshold (272k to be precise) but the property is new build, shared ownership. I want to buy 60% share (worth about 163k mortgage) and on the remaining 108k pay 250£ rent monthly, with 125 years lease. According to offical HTB ISA website faq
    I quote
    "What is the property price cap for shared ownership schemes?
    In the context of shared ownership properties the price cap applies to the full sale price of the property rather than just the share you initially buy. For shared ownership properties the full sale price is a multiple of the equity share you are buying. In practice this means that if you are purchasing a 25% equity share of a property for £50,000, the full sale value is £200,000. Alternatively, your conveyancer can calculate the sale price based on the price paid for the equity share you are buying plus the net present value of rental payments due over the term of the lease.

    You should speak to your solicitor or conveyancer and they will be able to advise you on whether the property you are purchasing is within the price limit and is eligible for a government bonus.
    " end of quote
    hence I should be able to calculate NPV value of 108k, I think its roughly (3% discount, 3k rent yearly, 125 years lease) 85k and together with 163k price of my share it total to 248k, right below limit. I struggled to find any concrete information, old guideline mention the method
    but in the more recent one the section VII has been changed. I've tried to ask developer about it but no-one seems to know, they send me to coveyancer but i don'w want to start process if I cant use HTB ISA (in total in 2 about 20k saved hence potential loss of 5k bonus)
    Originally posted by RobertKr
    You will need to find a conveyancer that (A) understands this and (B) agrees with your calculation methodology.

    I'm just speculating, but it is probably going to be easiest to convince a conveyancer to use the same NPV calculation that is used for stamp duty. Details are here: https://www.gov.uk/guidance/stamp-duty-land-tax-leasehold-purchases#NPV

    Plugging your numbers into the calculator linked on that page, it pretty much agrees with your NPV calculation (£84,551), so it looks like you can make a fairly convincing case for being under the threshold despite the total value of the property being above it.

    See also this clarification of the scheme rules - the relevant section for you is “Shared Ownership Arrangement”: https://www.helptobuy.gov.uk/documents/2016/11/clarification-to-the-scheme-rules.pdf/
    Last edited by masonic; 16-12-2019 at 6:46 PM.
    • RobertKr
    • By RobertKr 19th Dec 19, 11:31 AM
    • 3 Posts
    • 0 Thanks
    RobertKr
    Just to update everybody on the shared ownership HTB ISA threshold, I've got an opinion from one lawyer who told me that the threshold is fixed at 250k, and from another (recommended by developer, PLS solicitors who told me that I can use isa as long as NPV value od shared part takes me below 250k limit. What is more important I received the same replay from scheme administrator:
    As discussed, I can confirm that you can work out the purchase price either way as per the FAQ you have quoted from our website.

    So for clarity, in the context of shared ownership properties, the price cap applies to the full sale price of the property rather than just the share you initially buy. For shared ownership properties the full sale price is a multiple of the equity share you are buying. In practice this means that if you are purchasing a 25% equity share of a property for £50,000, the full sale value is £200,000.

    "
    As I said, if for example the full sale value as per the above was above the price cap, you can work out the purchase price a different way. This is where the next part of the FAQ is relevant. You can also calculate the sale price based on the price paid for the equity share you are buying plus the net present value of rental payments due over the term of the lease. If you work out the purchase price via this method and the combined amount of the equity share being purchased, plus the net present value of rental payments over the term of the lease is within the price cap then the purchase would be eligible.

    If you require anything further, please do not hesitate to contact us.

    Kind Regards

    Administrator of the Help to Buy: ISA scheme
    "
    Hence it seems to be possible to use HTB ISA for properties with shared ownership valued at more then 250k.
    hope it helps someone
    • iMarkeh
    • By iMarkeh 20th Dec 19, 8:43 AM
    • 5 Posts
    • 2 Thanks
    iMarkeh
    Yes, there's no obligation to use the money towards a property (although you'd miss out on the bonus by not doing so) - it's an easy-access account with no withdrawal penalties (unlike the Lifetime ISA) and so if you are eligible to open one then it is indeed a relatively generous savings account.
    Originally posted by eskbanker
    Hi again Eskbanker.
    Feedback: I took out the H2B ISA with Barclays after your reply and have put in the maximum amount possible so far

    Question: I have spoken to a few others with H2B Isas and they have said that while the bank interest still shows up in the account, you can not take it out. If you choose to withdraw money from the account, you can only take out the amount you have put in. Is this right or does the 11p interest belong to me to take out whenever I please? I did speak to Barclays and they weren't helpful on the matter.

    Thanks again, Mark
    • eskbanker
    • By eskbanker 20th Dec 19, 11:02 AM
    • 12,106 Posts
    • 15,007 Thanks
    eskbanker
    Question: I have spoken to a few others with H2B Isas and they have said that while the bank interest still shows up in the account, you can not take it out. If you choose to withdraw money from the account, you can only take out the amount you have put in. Is this right or does the 11p interest belong to me to take out whenever I please? I did speak to Barclays and they weren't helpful on the matter.
    Originally posted by iMarkeh
    It's an easy-access account, from which you can withdraw what you like when you like - apart from anything else, how could they differentiate between what you'd paid in and what they've added in interest (unless you withdrew the lot)?

    You could obviously challenge your acquaintances to put up some proof of the imaginary constraint that they refer to (they won't be able to), but in any case, why would you want to withdraw money from a generous account like this anyway, other than as a last resort?
    • iMarkeh
    • By iMarkeh 20th Dec 19, 1:04 PM
    • 5 Posts
    • 2 Thanks
    iMarkeh
    Those who I spoke to had a H2B isa from a few years ago and were told by the bank they couldn't take out any of the interest.

    I do not intend on withdrawing money from the account except at last resort but it's always good to know and keep your options open.

    I thank you for your help and I wish you a very Merry Christmas
    • woodface7
    • By woodface7 27th Dec 19, 8:38 AM
    • 122 Posts
    • 232 Thanks
    woodface7
    Does anyone know whether you can keep paying into an H2B isa if you inherit property? I know you couldn't have opened the account if you already had, but I haven't been able to find any info on what effect a later inheritance has, if any.

    The person I'm asking for never had any intention of asking for the government (taxpayer) bonus btw. They just use it - as advised by Martin - as a good savings account.
    • BeanoSnitch
    • By BeanoSnitch 27th Dec 19, 10:05 AM
    • 5 Posts
    • 2 Thanks
    BeanoSnitch
    Help to buy isa account is basically a savings account. It can be used and interest accrued ongoing. The bonus you wouldn’t be able to claim for an inherited property but the account would remain open until you close it. The question is whether the interest rate is better than other savings accounts out there. Owning a property is owning a property no matter how it’s obtained. You technically wouldn’t be classed as first time buyer anymore if the property is in your name
    Cogito ergo sum
    • masonic
    • By masonic 28th Dec 19, 4:21 PM
    • 12,724 Posts
    • 10,228 Thanks
    masonic
    Does anyone know whether you can keep paying into an H2B isa if you inherit property? I know you couldn't have opened the account if you already had, but I haven't been able to find any info on what effect a later inheritance has, if any.

    The person I'm asking for never had any intention of asking for the government (taxpayer) bonus btw. They just use it - as advised by Martin - as a good savings account.
    Originally posted by woodface7
    They will be asked periodically to check they are still eligible, and each new tax year they would need to make a declaration when they made their first deposit of the tax year. So, no, they wouldn't be able to continue using the account for very long after becoming ineligible, unless they were willing to make a fraudulent declaration to their bank.
    • TWennismore
    • By TWennismore 4th Jan 20, 1:18 PM
    • 1 Posts
    • 0 Thanks
    TWennismore
    Maxed out HTB ISA
    Hi Guys,

    I will max out my HTB ISA next tax year. I am currently with Halifax with HTB ISA with an interest rate of 2.25% which is above the current inlfation rate 1.5%. I am wondering whatever I will get interest paid for the amount exceeding £12,000 (I think you can still pay into HTB ISA even though it reaches £12,000?) since 2.25% is a good interest rate compared to all the other saving rates.
    I would really appreciate if someone can answer my question with CONFIDENCE.

    Thanks.
    • masonic
    • By masonic 4th Jan 20, 5:02 PM
    • 12,724 Posts
    • 10,228 Thanks
    masonic
    I will max out my HTB ISA next tax year. I am currently with Halifax with HTB ISA with an interest rate of 2.25% which is above the current inlfation rate 1.5%. I am wondering whatever I will get interest paid for the amount exceeding £12,000 (I think you can still pay into HTB ISA even though it reaches £12,000?) since 2.25% is a good interest rate compared to all the other saving rates.
    I would really appreciate if someone can answer my question with CONFIDENCE.
    Originally posted by TWennismore
    The maximum bonus you can receive on a HTB ISA is £3,000. There is no maximum balance or balance above which no interest is earned.
    • eskbanker
    • By eskbanker 4th Jan 20, 7:45 PM
    • 12,106 Posts
    • 15,007 Thanks
    eskbanker
    I would really appreciate if someone can answer my question with CONFIDENCE.
    Originally posted by TWennismore
    While masonic is a knowledgeable and reliable regular poster, surely if you're looking for the definitive answer (rather than that from an anonymous stranger on the internet, however reputable) then you'll be looking at the published product Ts & Cs to see if there's any mention of interest being paid differently above a certain threshold?
    • Rich2808
    • By Rich2808 6th Jan 20, 12:47 AM
    • 942 Posts
    • 735 Thanks
    Rich2808
    While masonic is a knowledgeable and reliable regular poster, surely if you're looking for the definitive answer (rather than that from an anonymous stranger on the internet, however reputable) then you'll be looking at the published product Ts & Cs to see if there's any mention of interest being paid differently above a certain threshold?
    Originally posted by eskbanker
    Alternatively ask the people who can confirm the answer - the Halifax.

    As their website makes clear they currently pay the same interest on balances of £1 or higher on their HTB isa - and there is no cap of £12,000 above which interest isn't payable.

    £12k is the maximum balance on which a 25% government bonus is payable following a house purchase - but there is nothing to stop anyone continuing to pay £200 in a month until November 2029 and accruing interest from their bank or BS in full on the whole sum as long as they still meet the first time buyer criteria.

    https://www.halifax.co.uk/isas/cash-isas/help-to-buy-isa/
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